IS YOUR LAZY VALENTINE CAUSING INFLATION?

“How to find a good spouse?

-the best single way is to deserve a good spouse.”

–Charlie Munger

We live in strange times. The cost of a carton of eggs feels like it rivals a house payment.

And it seems like the cost of everything else has increased too.

This negative inflation news also puts a bit of a damper on Valentine’s Day. You want to say, “be mine” to your valentine, pull out the wine and Valentine’s Day dinner on a candlelit table, and enjoy it. But the cost of those Valentine’s Day roses and that box of chocolates is higher than last year.

Instead of spoiling this picture with inflation, you would think that Cupid would shoot his arrows and help deflate some of these prices instead.

That idea is appealing, but instead, we may have to look at the role of an unexpected foe.

BIG PICTURE: WHAT IS CAUSING VALENTINE’S DAY INFLATION (AND INFLATION EVERYWHERE ELSE?)

It is a complicated subject. We know that inputs for raw materials have gone up and caused inflation. For example, remember the price of gas last year? For a while, the cutoff of Russian supplies made prices of petroleum products soar, but others have picked up the slack, and more products are on the market now. So prices are down partly because the raw cost of petroleum is down.

Your box of chocolates is subject to the kind of same economic pressure from raw materials. But that is not all of it.

The increasing cost of labor often causes inflation too.

And at this point in the economic cycle, the Federal Reserve’s primary opponent is rising wages. So if it seems like increasing interest rates is aimed at making people unemployed, that is not far off.

So far, their strategy has not worked. Unemployment is at a record low.

But their aim remains the same: bring the tight labor market into balance with the number of jobs available by using interest rates to choke off demand.

But the other strategy is to increase labor supply so that labor competition will not raise wages.

I like that possibility the best. When more people are in the labor market, it helps keep wages in check. And being employed is good.

A STEALTH INFLATION FACTOR

You know that there is a catch to this reasoning, right? A major obstacle stands in the way of this economic nirvana: where are all these extra workers supposed to come from?

After all, everyone who wants a job is in the best place in a generation to get one. So where is extra labor if jobs are so plentiful?

At your Valentine’s Day dinner, you may be sitting across from the reason for wage inflation: the man in your life may need to start working. Increasing labor supply will keep inflation down and might make everyone happier too.

You would think that they would already be working. After all, almost two-thirds of families live paycheck to paycheck. So, there is an incentive to keep away from the thin edge.

And yet, amid all of the financial stress in recent years, the rate of men participating in the workforce has declined steadily. When it comes to applying for jobs, many of them won’t do it. Thirty years ago, only three percent of the male labor force was not trying to find employment. Now it is over ten percent. Of every man seeking a job, five are sitting the job search out.

WHO ARE THESE GUYS?

I am not sure. And no one else is either.

What we do know is not attractive. Watching TV/staying at a computer screen is their major activity for about six hours daily.

THE THEORIES

Here are some of the popular theories for the decades-long disengagement of men from the workforce:

  • Subsidies—some experts feel that over the last thirty years, it has become easier to thrive on government subsidies, so men have given up work. If that is true, it does not explain why men are not working when so many families cannot meet unexpected expenses for emergencies, but see below.
  • Depression—according to this theory, depression feeds inaction and leads to the erosion of the workforce. Unfortunately, there is some evidence that this is a factor, along with injury and disability.
  • Caregiving—this is one I have advanced, but I have no solid proof. It is based on situations among people I know. Some men help around the house and take care of the household when their spouse has a strong career instead of looking for a job. Or they can care for family members and aged parents beyond a certain age. As a person who has been through this, I know it is more common than is usually supposed.
  • Work is not worth it—rightly or wrongly, some men do not feel that work at the lower end of the income spectrum provides enough reward.

YES, I FEEL LIKE I KILLED CUPID

I don’t mean to make this romantic holiday a downer. But jeez, guys, get a job. Your spouses and partners will thank you for it. Of course, there are obvious exceptions for male caregivers, men with disabilities, and others I have noted. So that leaves fewer men available for work than many pundits suppose. But still.

Romantic attraction is enhanced by people who strive, stay competitive, and connect with others. Having a job is one way of achieving those goals. It is not a cure-all. But staying in front of a screen six hours a day for no purpose is not healthy either.

So think about work to recapture momentum. Who knows? It might put some zip back in your relationship. You might start to think about hearts and flowers again.

Disclaimer: consult with a financial fiduciary before taking any steps outlined here. Not all advice may be suitable for your circumstances or investment style.

Photo Credit: ekaterina-shevchenko

License: Unsplash